Checkoff Debate Stirs Clash within Organic Food Industry

A battle is brewing in the organic food industry. The largest trade association for organic farmers, marketers, and processors wants growers to help pay for promotional campaigns.

Note: The original post of this story incorrectly outlined how the proposed organic checkoff would be assessed. The proposed model includes a mandatory assessment on net organic sales. Farmers and processors who hold organic certification would be assessed 1/10th of 1 percent of total gross sales minus the cost of certified organic inputs such as feed or seed.

They want to use a decades-old funding model that paid for iconic ads such as “Got Milk?” and “Beef: It’s What’s For Dinner.” But deciding how to spread the organic message is dividing the sector into factions.

The Organic Trade Association (OTA) has taken up the banner for an organic “checkoff,” a fund designed to promote a particular industry by creating marketing campaigns or engaging in research. Legislation sanctioning the creation of a checkoff fund for the organic industry was included in the Farm Bill passed in 2014.

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The OTA is the loudest voice for the organic industry in Washington DC, with a focus on policy and lobbying. The organization counts some of the largest food companies in the country among its members.

But that cozy relationship with big business rubs some farmers the wrong way. Other prominent organic groups like the Wisconsin-based Cornucopia Institute panned the organic checkoff idea almost immediately after the Farm Bill became law.

The stakes are high for the organic industry to come up with a cohesive identity. In 2000, the organic seal, with all the certification and standards behind it, became available to food manufacturers and farmers. Since then, the organic sector’s market share of the food industry has ticked higher, currently at 4 percent of all food sales. In 2013, organic food sales jumped to $35 billion, a one-year rise of 11 percent. Organic condiments pull in roughly $830 million a year.

More shoppers are looking for the USDA organic logo, even though industry watchers say many consumers are confused about what it represents.

“They don’t understand that there’s a third party coming onto to the farm to do inspections every year,” said Missy Hughes, board president for the Organic Trade Association and general counsel for Organic Valley, a dairy cooperative. “They don’t understand that farmers are prohibited from using certain materials. And they don’t understand how much work goes into making those organic products.”

To clear up confusion the OTA wants to use checkoff dollars, estimated to be around $30 million per year if the organic checkoff becomes a reality, to pay for consumer advertising and research.

“There is a lot of controversy around checkoffs,” Hughes said. “And the way they’ve been constructed in the past has really resulted in this lack of transparency, concerns about corruption and concerns that they’re not really meeting the needs of farmers.”

Here’s how a checkoff works: each farmer pays a small amount into a fund. It could be a penny on a bushel of wheat or a dollar per cow. For the proposed organic checkoff, farmers who bring in more than $250,000 a year would be assessed one-tenth of one percent of their gross revenue annually. If an organic farmer makes $1 million gross revenue, they could be assessed upwards of $1,000.

Here's how a checkoff works: each farmer pays a small amount into a fund. It could be a penny on a bushel of wheat or a dollar per cow. For the proposed organic checkoff, farmers who bring in more than $250,000 a year in organic sales would be assessed one-tenth of one percent of their gross revenue, minus the cost of certified organic goods, such as seed, annually. If a farmer sells a net $1 million in organic goods, they could be assessed upwards of $1,000.

But some farmers say promotion unfairly benefits big companies. In fact, checkoffs have been the subject of Supreme Court cases, where farmers have argued that a mandatory payment for advertising infringes on free speech. In the most recent case in 2005 justices upheld the controversial beef checkoff program.

“There’s always this debate about scale in organic agriculture. And I believe that’s entirely the wrong debate,” said Dave Carter, a former member of the National Organic Standards Board, which creates the federal standards for organic farmers.

A schism exists between billion dollar organic companies and small local farmers, all of whom, if they make a certain amount of money, would be forced to pay into the fund. Some worry about the specter of Big Organic.

Carter says the organic checkoff could have a tricky path forward. He’s in favor of it, but he says the organic sector’s diversity could be its downfall. Most checkoff programs are commodity-specific for beef, or mushrooms, or processed raspberries. Organic cuts across all commodities.

“That’s the challenge is that organic is such a rich, broad message, that that’s where we’re losing the debate right now. It encompasses so many things,” Carter said.

Farmers Jason and Natalie Condon grow certified organic vegetables in Lafayette, Colo. They oppose the formation of an organic checkoff.

Credit Luke Runyon/Harvest Public Media

Jason Condon and his wife Natalie Condon grow certified organic vegetables in Lafayette, Colorado, near Denver. Farmers would be the biggest group paying into the proposed organic checkoff. Farmers of mid-size operations like Condon’s Isabelle Farm have been the toughest sell.

“It sounds kind of bad. And I hate to say it this way, but it’s not my job to make sure that there’s organic across the country,” Condon said.

The Condons’ farm pulls in close to $1 million in annual revenue, but like most farmers, Condon’s margins are still tight. If the checkoff becomes reality he could be required to pay upwards of $1,000 a year, pooled into a fund to pay for messages he might not endorse. He prefers marketing to his neighbors, nearby restaurants and grocery stores.

The Condons' farm pulls in close to $1 million in annual revenue, but like most farmers, Condon's margins are still tight. If the checkoff becomes reality, depending on his costs of organic inputs, he could be required to pay upwards of $1,000 a year, pooled into a fund to pay for messages he might not endorse. He prefers marketing to his neighbors, nearby restaurants and grocery stores.

“This checkoff thing feels very contrary to that,” Condon said. “This sort of, ‘No, no, you’re not doing it good enough. Let’s take your money and give it to some high-paid Washington folks who could really do some good.’”

Advocates are still trying to convince farmers like Condon that the checkoff is a good idea. The OTA still needs to submit a formal proposal to the USDA, which would complete a review. OTA representatives say they’ll be ready to submit that proposal in the next couple months.

Eventually, more than two-thirds of organic producers would have to vote in favor for it to go into effect.

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